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The 'Obamacare Cliff' - don't make over 400% of the poverty level!

Be careful how much you make in 2014 if your looking for health insurance under Obamacare. The 'Obamacare Cliff' makes you ineligible for government subsidies if your income is greater than the 'Cliff' amount. Going over the Cliff means you will not get any government help in paying your insurance premiums under Obamacare.

The 'Cliff' occurs at the 400% Federal Poverty Level (FPL) income. This makes a person eligible (at 400%), or ineligible (above 400%), for a government insurance premium subsidy. Here's the subsidy amounts in 2012 dollars,

Age 45-54

Family Size

Income

Subsidy

Income

Subsidy

1

$44,680

$1,440

$44,681

$0

2

$60,520

$9,672

$60,521

$0

3

$76,360

$8,172

$76,361

$0

4

$92,200

$6,660

$92,201

$0

5

$108,040

$5,160

$108,041

$0

If you're 46 yrs old with a family of 3, and make $76,360, the government will pay a $8,172 subsidy towards your health insurance premiums. If you make $76,361, the government pays $0! You just went over the Cliff!

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

So now employers won't be the only ones using PT jobs. I can see it now, sir I need fewer hours so I can have my free obamacare....to go with my obamaphone....with my obamaloan....and my obamagreencar....

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

Lots of safety nets have these sort of problems. The smart thing to do would be to taper off the benefits more smoothly.

Of course, some of the whackos will see this as evidence we should remove the safety net entirely.

Fortunately, the "cliff" on the PPACA is high enough on the income scale to be more easily dealt with. Previous issues with Medicaid and some other safety nets sometimes had the "cliff" at outrageously low incomes. PPACA makes this better, one can slide down from Medicaid to subsidized insurance to less subsidized insurance and THEN to no subsidy. So let's not act like this is a problem created by Obamacare, it's a problem you think isn't sufficiently solved by it.

Originally Posted by CalGun

So now employers won't be the only ones using PT jobs. I can see it now, sir I need fewer hours so I can have my free obamacare....to go with my obamaphone....with my obamaloan....and my obamagreencar....

This problem already existed. What would you propose to solve it?

Last edited by Deuce; 12-07-12 at 03:57 PM.

He touched her over her bra and underpants, she says, and guided her hand to touch him over his underwear

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

Originally Posted by CalGun

So now employers won't be the only ones using PT jobs. I can see it now, sir I need fewer hours so I can have my free obamacare....to go with my obamaphone....with my obamaloan....and my obamagreencar....

Nah see, if you make enough to qualify for the free Obamacare you've made too much to qualify for the Obamaphone.

Originally Posted by Deuce

This problem already existed. What would you propose to solve it?

Gut the nets

If you need to misrepresent your opponent's position, you don't really believe in yours, you have no integrity and as Tony Montana says, "Any man without his word is a cockroach."

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

The better solution would have been to increase the Medicare payroll deduction a couple of percent (to start) and include anyone denied private health insurance with a medicare supplement so they could obtain something. I don't think that would have taken 2000 pages, required a single IRS agent, or forced the middle class to endure big premium increases to make up for the insurance handed those insurance companies can't afford to serve.

Originally Posted by Deuce

Lots of safety nets have these sort of problems. The smart thing to do would be to taper off the benefits more smoothly.

Of course, some of the whackos will see this as evidence we should remove the safety net entirely.

Fortunately, the "cliff" on the PPACA is high enough on the income scale to be more easily dealt with. Previous issues with Medicaid and some other safety nets sometimes had the "cliff" at outrageously low incomes. PPACA makes this better, one can slide down from Medicaid to subsidized insurance to less subsidized insurance and THEN to no subsidy. So let's not act like this is a problem created by Obamacare, it's a problem you think isn't sufficiently solved by it.

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

Originally Posted by Deuce

PPACA makes this better, one can slide down from Medicaid to subsidized insurance to less subsidized insurance and THEN to no subsidy. So let's not act like this is a problem created by Obamacare, it's a problem you think isn't sufficiently solved by it.

You don't slide down from a subsidy to no subsidy, you fall down...hard.

The way they set this up is a total nightmare. Here's how it works,

- The insurance Exchanges in your state estimates the level of government subsidy you're entitled to, this is done after Oct 2013 for the year 2014. How they do that is a mystery, for 2014 they might use your 2012 tax returns, or your 2013 estimated return, or your estimated 2014 income.

- If your estimated income is below the 400% poverty level, you get a government subsidy paid monthly to the insurance company, your monthly premium bill is the difference between the total insurance premium and the subsidy amount.

- In 2015, you fill out your tax return for 2014. If your income is $1 or more over the 400% poverty point (because your wife got a job, you got a raise, your business did better than expected, etc.), you have to pay back the entire subsidy as part of your tax bill. For a couple age 50 this would be almost $10,000, for a couple age 60 this would be $13,000!

It's ridiculous that there's no smooth transition here. I've never seen an IRS tax schedule where making $1 over an arbitrary limit like 400% FPL will cause a $13,000 tax increase! This is got to be fixed or it's going to cause a lot of grief.

Re: The 'Obamacare Cliff' - don't make over 400% of the poverty level!

Originally Posted by CapCat

You don't slide down from a subsidy to no subsidy, you fall down...hard.

The way they set this up is a total nightmare. Here's how it works,

- The insurance Exchanges in your state estimates the level of government subsidy you're entitled to, this is done after Oct 2013 for the year 2014. How they do that is a mystery, for 2014 they might use your 2012 tax returns, or your 2013 estimated return, or your estimated 2014 income.

- If your estimated income is below the 400% poverty level, you get a government subsidy paid monthly to the insurance company, your monthly premium bill is the difference between the total insurance premium and the subsidy amount.

- In 2015, you fill out your tax return for 2014. If your income is $1 or more over the 400% poverty point (because your wife got a job, you got a raise, your business did better than expected, etc.), you have to pay back the entire subsidy as part of your tax bill. For a couple age 50 this would be almost $10,000, for a couple age 60 this would be $13,000!

It's ridiculous that there's no smooth transition here. I've never seen an IRS tax schedule where making $1 over an arbitrary limit like 400% FPL will cause a $13,000 tax increase! This is got to be fixed or it's going to cause a lot of grief.

Facts to fix your GOP lies.
You use your 2012 and 2013 income.

"Tax credit" is not a normal tax credit. it is paid direct to insurer. You dont have to have the money first.